Regal Printing, Inc., prints and binds encyclopedias. The following information was found in the accounting records: Sales
Question:
Regal Printing, Inc., prints and binds encyclopedias. The following information was found in the accounting records:
Sales price per unit . . . . . . . . . $ 120
Direct materials per unit . . . . . . . . . $ 40
Direct labor per unit . . . . . . . . . $ 20
Variable overhead per unit . . . . . . . . . $ 12
Fixed overhead per unit . . . . . . . . . $ 25
Fixed selling costs . . . . . . . . . $ 75,000
Variable selling costs . . . . . . . . . $270,000
Beginning inventory . . . . . . . . . 0
Units produced . . . . . . . . . 80,000
Units sold . . . . . . . . . 75,000
Required
a. Under absorption costing, what is Regal’s operating income?
b. Under variable costing, what is Regal’s ending Finished Goods Inventory balance?
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